Special Audit / Limited Review

Introduction

A review engagement is based mainly on analytical procedures and inquiries conducted by the auditor. On general terms it can be defined as quarterly audit of financial statements, where there is no opinion given by the auditor.

Applicability

Every company listed in SEBI and entities whose account are to be consolidated with listed entities under the clause 41 of the listing agreement is required to furnish unaudited financial results in the prescribed format within 45 days of the end of the respective quarter to concerned stock exchange

Difference from Audit

  1. Scope of limited review is narrow when compared with full-fledged audit.

  2. In audit, auditor gives opinion,whereas in review, the reviewer just state that he has not noticed or noticed any point due to which he found financial statement to be misstated.

  3. In audit, reasonable assurance is given by the auditor where as in case of limited review only statement is given by the reviewer.

Procedure

General procedure to be followed:

  1. The auditor and client must agree on the engagement terms regarding the scope and extent of agreement

  2. Understand the nature and environment of the entity, accounting procedures followed and internal control of the company.

  3. On the basis of information collected and after assessing the risk involved, the auditor will perform the various actions.

  4. Any misstatement observed by the auditor, he must assess the value of that misstatement on the financial result.

  5. Lastly the auditor will communicate regarding any substantial misstatement to the management and if the management does not respond within the provided timeframe, then provide his statement accordingly.

Consequences of non-compliance

  1. In case of non-compliance for the first time, fine payable of Rs 5000/- per day after the last of submission till the date of compliance. And if non-compliance exceed 15 days, then additional fees of 0.1% of Paid up capital of entity or Rs 1crore whichever is less

  2. In case of subsequent non-compliance, fine payable of Rs 10000/- per day after the last of submission till the date of compliance. And if non-compliance exceed 15 days, then additional fees of 0.1% of Paid up capital of entity or Rs 1crore whichever is less.